Reddit's Advertising Revenue Surges by 50% in 2024, Reaching a Whopping $1.2 Billion
Reddit Reports Strong Q4, Posting 71% Year-on-Year Revenue Growth
Reddit concluded Q4 2024 with a significant surge in total revenue, amounting to $427.7 million. This impressive figure represents a 30% increase in daily active uniques (DAUq) worldwide, reaching 101.7 million.
The company's financial success extended to the entire year, with total revenue rising 62% to $1.3 billion and advertising revenue increasing 50% to $1.2 billion. Q4 marked the second consecutive profitable quarter for Reddit, recording a net loss of $484 million. However, this deficit was attributed to "accounting charges related to stock-based compensation," as mentioned by CFO Andrew Vollero during an earnings call with analysts on 12 February.
Reddit anticipates Q1 2025 total revenue to range between $360 million and $370 million. During the earnings call, COO Jennifer Wong highlighted the company's growth "across the funnel" in Q4, with the fastest growth in brand advertising campaigns in more than three years. Mid- and lower-funnel revenue now make up 60% of the company's total ad revenue. Wong emphasized the need to fine-tune advertising products to cater better to performance-oriented advertisers.
One significant stride for Reddit in 2024 was going public in March. Since then, the platform has introduced several new features, such as giving brands the option to place ads within the comments sections. This novel placement accounted for 3% of ad impressions in Q4.
In December, Reddit debuted Reddit Answers, an AI-powered search tool that condenses community discussions for users. Presently exclusively available in English and non-monetized, the company is building a team dedicated to expanding this feature, viewing it as a potential driver of future ad revenue.
Other 2025 developments include the launch of Ask Me Anything (AMA) ads, enabling brands to promote their Q&A sessions. Additionally, Pro Trends offers real-time insights on over 100,000 keywords, benefiting brands. The company plans to invest in improving the usability and adding automation features to enhance performance.
Despite surpassing revenue expectations, Reddit shares experienced a drop of more than 15% following the earnings call. Some experts link this plunge to lower-than-expected DAUq growth and allegedly changes in the Google search algorithm, which they believe might have impacted user growth in Q4.
Photo by Brett Jordan on Unsplash
- Reddit's strategy to fine-tune advertising products is aimed at catering better to performance-oriented advertisers, especially in the context of the growth in brand advertising campaigns observed in Q4 2024.
- As the company continues to expand, it is investing in the development of Reddit Answers, an AI-powered search tool that not only provides users with condensed community discussions but also has the potential to drive future ad revenue.
- The introduction of new features such as AMA ads and Pro Trends, which offers real-time insights on over 100,000 keywords, are part of Reddit's plans to enhance its media platform and attract more finance and business collaborations in the tech industry.
